French players agree terms of engagement

French nuclear fuel giant Areva and nuclear generator EDF have announced a long-term partnership agreement covering the supply of natural uranium for France's nuclear plants from 2014 to 2030.

According to a joint statement issued by the companies, the total volume of uranium involved could be in excess of 20,000 tonnes. The companies have agreed principles that foresee the extension of the supply contract from Areva's existing mines and also open up the possibility of EDF part-funding the development of a new mining project in exchange for a share of future production.

The principles agreed by the two companies will form the basis for a series of agreements which will be subject to approval by the groups' management bodies, and are in line with a January 2011 direction by France's nuclear policy council to establish a strategic partnership between them. The council also directed Areva to spin off its uranium mining interests into a subsidiary as a condition for the company to receive strategic and financial support in the future.

The latest announcement comes on the heels of two earlier agreements - EDF placed a $1.5 billion order with Areva for steam generators in September 2011 followed by a $1.33 million order for monitoring and control systems for 20 of the utility's reactors in December - and Areva CEO Luke Oursel noted that the latest agreement consolidated French nuclear power sector unity. "This agreement demonstrates the solidity of our relationship with our historic partner, and demonstrates anew the ability of Areva to offer its customer long-term solutions which are tailored to their needs and ensure security of supply," he said. Nearly 40% of EDF's annual natural uranium requirements are already supplied by Areva.

EDF CEO Henri Proglio said the partnership confirmed the "cohesiveness" of the French nuclear industry and was "fully consistent" with company strategy to secure uranium supplies for its plants.

In December 2011 Areva announced a long-term action plan to turn the company around from mounting losses following on from difficulties with reactor construction projects in Finland and France, the downgrading of its uranium assets in Namibia and the effects of the Fukushima accident on the uranium and reactor construction markets. At its meeting on 8 January, France's nuclear policy council confirmed the continuation of plans to extend the operating lives of French nuclear plants beyond 40 years, as well as the project to construct a new EPR power plant at Penly. Both should bode well for Areva's order books.